6,7,8 - RP, RAP, LL-T

Question 1

Agents

Answer 1

Listing Broker - Sells the house
Selling Broker ('buyer") - subagent 
       Fiduciary duty to seller
       But: CA - duty to buyer for diligent visual inspection
Buyer's Broker - you pay, represents you

Notes:
Conflict of interest - increase price, increase commission
Commission- due upon “ready willing and able buyer”
but: when contractual provision - must close; custom - must close

Question 2

Real Estate Contract

Answer 2

“Executory” - title not transferred upon signing
Contingencies: title search, financing, inspection
Closing = deed transfer
Subjects to Statue of Frauds

Question 3

Real Estate - Statute of Frauds

Answer 3

Contracts must be in writing
Need: Names, Land, Signature of Parties, sometimes Price (can be ‘market’)
Oral understanding ok if no objections
if objections - only if part performance or estoppel

Question 4

Real Estate - Closing

Answer 4

Deed Transfer
Some states require physical presence
CA - 3rd party escrow
Lender provides proceeds of land to seller, seller pays off loans, brokers, legal fees and pockets remainder

*only happens if buyer does no rescind

Question 5

Grounds for Rescission

Answer 5

Failure of contingency
False Statement (action)
Non-disclosure of material hidden defect (inaction)
Modern - if known and not discoverable
Old CL - buyer beware

Question 6

Material Defects & Disclosure

Answer 6

Objective - important to reasonable person in decision
Subjective - affect value or desirability by actual buyer

Obvious Defect - no duty but still grounds for rescission (inspection clause)
“AS IS” effect - if discoverable defect no grounds for rescission, modern - must disclose hidden defects still; CA disclose even if as is (//verify this//)
Offsite Condition - CL = no disclosure; modern - disclose (CA - noise problems that affect $ must disclose)

**recognize material defect and recognize non-disclosure by buyer

Question 7

Equitable Conversion

Answer 7

After signing and before closing:
Buyer = equitable owner; Seller holds title as trustee
B has Risk of Loss unless negligence by S or unmarketable title
B gets benefit of insurance that S holds as trustee
Remedy for breach = specific performance

Question 8

Deed Types

Answer 8

Transfers at moment of closing
General Warranty
* seller owns, has right and is conveying in fee simple, free of encumbrances. buyer will enjoy quiet title and seller will defend buyer from all claims
Limited (Special) Warranty - (ADD TO THIS)
Quitclaim - whatever i have, i’m giving you. no promises

Question 9

Marketable Title

Answer 9

free from reasonable doubt whether seller can convey
Defects to marketability:
* Record Chain - buying from seller w/o full interest
* Encumbrances - mortgage, easement, use restrictions

Question 10

Merger Doctrine

Answer 10

When buyer accepts deed (at closing), the buyer is deemed to be satisfied that all contractual obligations have been met.

• Contract merged into deed and deed is final act
• Buyer can then only sue on warranty in deed
• Unless - contract is an independent or collateral obligation

Question 11

Warranty of Habitability and Quality

Answer 11

Common Law - Buyer Beware
Uniform Land Transaction Statute:
*New Construction - warranty of skilled construction runs with land
*Used and New Houses - warranty of suitability
*Contractual Exception - not against live-in buyers

Question 12

Remedy Options

Answer 12

Damages - benefit of bargain rule
Specific Performance - land is unique
Loss of Deposit - if buyer not able to close at agreed upon date

Question 13

Title Assurance Recording Systems

Answer 13

Goal: provide prospective buyer means to verify earlier transaction in the property
Pure Race - SP wins if first to record
Pure Notice - SP wins if no actual or constructive notice
Race-Notice - SP wins if no notice & first to record

Notice: Actual, Record (except defective), Inquiry
Wild Deed Rule - deed outside of chain of title (i.e no notice)
Shelter Rule - protects SP who buys from a GFP

Question 14

What to Record

Answer 14

Sale of Land, Life Estate, Mortgage, Restrictive Covenants, Tax Liens
NOT recordable: AP, Easement by necessity, short-term leases

Question 15

Title Assurance

Answer 15

Title Examination by Lawyer

Title Insurance - covers matters not disclosed even in careful search & litigation cost.

Question 16

Mortgage

Answer 16

Recorded in system (race, notice, race-notice)
Follows Land
Assume Mortgage = both liable but A primary
Subject to the Mortgage = A not liable but land taken if O defaults
Must be in writing
2 Docs: Note - promise to make payments and Mortgage - right to sell land for default

Question 17

Mortgage Foreclosure

Answer 17

Until Foreclosure - debtor/mortgagor has title and right to possession.
Redemption in Equity - debtor can pay off missed payment and penalties up to foreclosure
(no clogging - can’t waive this right)
Statutory Redemption - can redeem for period after foreclosure

Question 18

Rule Against Perpetuities Question

Answer 18

RAP - is when someone conveys an interest ask the question, “is there any possibility that it will vest more than 21 years after death of everyone alive at the creation”

We will either know or won’t know will vest within 21 years.

2 ways to execute

(1) positive test - if you find one person, you’re okay
(2) negative test - if you can’t find anyone, yes, void

Question 19

Numerous Clausus

Answer 19

doctrine that says you can’t create new property interest/right
Why: property interest run with resource and future generations can be bound by it
(Court in equity can create “pre-possessory” interest in popov)

Question 20

Life Estate

Answer 20

LE Holder - Right to possess during lifetime - current possessory interest (this is transferable during life)

• can be defeasible - house to bunny as long as my widow.
• Future Interest is to someone else

Damage by LE holder is called Waste
*Affirmative Waste - throwing pizza on
*Permissive Waste - neglect
*Ameliorative Waste - improve value (may not be compensated)
Duty of possessor to prevent waste, not to impair value, make reasonable repairs

Question 21

TRUST FUND

Answer 21

H->TM->P
Hilton gives to Trust Manager
Trust Manager manages principle and gives Paris some of benefits
(Know TM has fiduciary duties to H and P to generate and pass on and keep trust healthy and functioning)
P is a life tenant of the trust. T is a separate entity

Question 22

Rule of Convenience

Answer 22

RAP - class closed when A (life estate) dies

Question 23

Lease or License

Answer 23

Language - often mixed; not accepted when to evade tenant protection
Conditions
(1) specific uses or general control
(2) right to exclude owner?
(3) defined area of land?

Mall Kiosks = license not lease, not exclusive
Billboards = license not lease
Hotel Guests = long period = tenant
Employment on premise (farmhand) = if occupancy depends only on employment less likely to get tenant. If pay, more likely
Dorms = depends - can be revocable license, Hastings chooses your room.

Tenant when: Strong possessory interest. Expectation of Exclusion

Question 24

Possessory Estates: Types

Answer 24

1. Term of Years - fixed period and duration
2. Periodic - period specified, but undetermined duration
3. At Will - no definite time horizon
4. Tenancy at Sufferance
5. Life Tenancy (aka Life Estate)

Question 25

Term of Years

Answer 25

Fixed Period
Termination Date known
End Automatically (no-notice)
Holdover tenant requires eviction
Inheritable and alienable (new owner issue)
Must be in writing

Question 26

Periodic Tenancy

Answer 26

Undetermined duration - continues until notice by L or T
Specific period - yr to yr, wk to wk
Created by implication when:
(1) no mention of duration bu provision for payments at set intervals
(2) Oral Agreement for term of year (violates SoF) become implied periodic tenancy by tender of rent
(3) Landlord elects to holdover residential tenant
Rent Increase = new rental agreement with notice
Rent Termination = notice required equal to period (u.o.n 6 month notice if >= year to year

Question 27

Tenancy at Will

Answer 27

Tenancy with no fixed duration as long as L or T desires
Like license but full control
Must be expressly agreed to (otherwise periodic tenancy)
Can be terminated by either but reasonable demand to quit is usually needed

Question 28

Tenancy at Sufferance

Answer 28

Tenancy created when T has wrongful held over past the expiration of lease.
Purpose: all L to recover rent
Lasts until L evicts or elects to hold T to new tenancy

Question 29

Landlord Rights

Answer 29

Select Tenants
Holdover Tenants: Evict (no self-help) or New Lease
Premature Moveout: Surrender, Ignore, Re-let

Question 30

Tenant Rights

Answer 30

Rent Out: w/ no provision can transfer assign (whole) or sublease (part) with no prior approval
Implied Warranty Broken - can: move out, repair & deduct, reduce rent until court determines fair rent (rent must be in escrow)
If lawfully report L, L cannot retaliate: raising rent, end lease, harass T

Question 31

Assignment & Sublease

Answer 31

LL & T1 and T1 to T2
Assignment:
L and T2 - privity of estate - obligations in lease that run with liable (no privity of K unless assumes all promises)
L and T1 - privity of contract - no privity of estate
Sublease: no nexus between L and T2
condition for denying: reasonableness
c

Question 32

Duties of Landlords

Answer 32

1. Provide Possession
2. Provide Quiet Use and Enjoyment - (Res & Com - circumstances around dwelling) - Must be substantial interference due to failure to act (incl 3rd parties) or constructive eviction
3. Implied Warranty of Habitability (Res only - about the actual dwelling)
   fit for basic dwelling
4. Duty to Mitigate

Question 33

Tenant/Landloard Liability

Answer 33

Routine Repairs
Cannot commit waste (voluntary/overt destruction, permissive neglect, or ameliorative)
NOT responsible for wear and tear
Law of Fixtures - permanent fixture can’t remove (even if put in except if no substantial harm)
Losses by Nature - Modern = L (unless T’s fault); Old CL = T